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9 July 2024 | FXGT.com

NZD/USD Hits Three-Week High Ahead of RBNZ Meeting

  • NZD/USD Reaches Three-Week High: The NZD/USD pair hit a new three-week high above 0.6150 during Monday morning, marking the fifth consecutive session of gains for the Kiwi. This upward movement is fuelled by speculation of the Federal Reserve cutting interest rates starting in September, following the June US Nonfarm Payrolls (NFP) report, which pointed to a normalization in the labour market.
  • RBNZ Policy Meeting: This week, the spotlight is on the New Zealand Dollar due to the RBNZ’s monetary policy meeting on Wednesday. The RBNZ is widely expected to keep borrowing rates unchanged at 5.5%. Investors will closely watch the policy statement for any hawkish hints on future interest rate moves, which could prompt investors to scale back rate cut bets, supporting the New Zealand Dollar.
  • RBNZ Outlook: The RBNZ is expected to maintain its current stance without turning dovish on Wednesday, despite economic weaknesses, due to the lack of new inflation data. The next CPI report, critical for rate cuts, will be released on July 17th, suggesting that the July policy statement will not be particularly optimistic.
  • US Fed Chair Powell Testifies: Jerome Powell’s testimony later today is anticipated to continue the dovish tone following last Friday’s soft nonfarm payrolls report. Markets predict a 75% chance of two rate cuts this year, with the first likely in September. Powell is unlikely to counter these expectations given softening job market conditions and inflation pressures, as well as restrictive policy settings.
  • Impact of US Inflation Report: The upcoming US Consumer Price Inflation report on Thursday could delay a dovish shift by the Federal Reserve. A strong report would contradict signs of weakening economic activity and could act as a catalyst for a recovery of the US Dollar.
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